Barratt Redrow shares spike on FY forecast, £100m buyback

(Sharecast News) - Shares in Barratt Redrow surged on Wednesday as the housebuilder said it expected full-year earnings to be at the upper end of expectations after a jump in interim profits and also announced a £100m share buyback. The company on Wednesday posted pre-tax profit of £117.2m, up 23% and lifted its dividend by a quarter to 5.5p a share. Consensus estimates for 2025 adjusted profit before tax were £542m with a range of £506m to £588m. Shares in the company were up 8% in early London trade.

"As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January," said chief executive David Thomas.

"Whilst the housing market remains sensitive to the wider economy and mortgage rates and availability, there remains a significant shortage of homes in the UK."

Barratt, which took over Redrow last year, said it expected to deliver around 22,000 homes a year in the medium term, with operating margin recovering to around 15% and return on capital employed - including land creditors - to 20%.

Forward sales as at February 2 were 10,903 homes compared with 11,460 a year ago at a value of £3.35bn (£3,13bn in 2024) with 7,702 homes of these total forward sales either exchanged or contracted, down from 8,524.

"The group is hoping that it is now at an inflection point, with its confidence in future prospects bolstered by the acquisition, such as providing access to the more affluent market in which Redrow tends to operate," said Interactive Investor head of markets Richard Hunter.

"At the same time, early synergies have resulted in the group upping estimates for cost savings of £100m by year three from a previous £90m, with a combined land pipeline of over 92000 plots and an intent to deliver around 22000 homes per annum in the medium term still in place."

"Barratt Redrow is under no illusions that challenges remain, and the share price similarly has some work to do. Prior to this update, the shares had declined by 10% over the last year, as compared to a gain of 15.9% for the wider FTSE100, and by 30% over the last three years."

"Nonetheless, prospects have been bolstered by the outlook for the medium term, as indeed has a market consensus which has recently improved to a strong buy, suggesting that bulls of the stock are beginning to return in full force."

Reporting by Frank Prenesti for Sharecast.com